The most notable exception to this was the US. Historically, health care in most countries has been provided through government-owned providers or heavily regulated private providers. Second, we cover a market outside the United States.
As time progresses and more data become available, it will be possible to model the convergence from short-run price dynamics to a long-run equilibrium. We expect that Dutch market parties will exhibit a steep learning curve as they adjust their terms over time and become more astute at balancing the trade-offs in their efforts to improve their bargaining strength. This provides valuable insights into the workings of an “emerging market” where market parties have little or no prior experience with bargaining and selective contracting. First, we analyze the effect of both hospital concentration and insurer concentration on prices in a period just after the introduction of price competition in the Netherlands. The contributions of this paper are fourfold. 1 Unfortunately, we do not currently posses consumer demand data and are limited to aggregate industry data. As a consequence, our analysis is best thought of as an empirical investigation of the intuitive idea that more concentrated markets have less price competition. The idea is that market structure determines the conduct of firms and that conduct then yields market performance. In this paper, we employ a traditional empirical approach in industrial organization research: the structure–conduct–performance (SCP) approach. For that purpose, we regress the bargaining share of the hospital on the concentration and market shares of both hospitals and insurers. In the second model, we use a bargaining model to describe how the gains from trade are divided between hospitals and insurers. In the first model, we estimate the price–cost margin as a function of the Herfindahl–Hirschmann Indices (HHIs) and the market shares of hospitals and insurers. We estimate two models describing the interaction between hospitals and insurers in determining the negotiated prices. We investigate the effects of buyer and seller concentration on the price of the unregulated part of the Dutch hospital care in 20. The Dutch government is also planning to introduce more incentive-based mechanisms in the currently regulated domain. In 2005, competition has been introduced in some segments in the Dutch health care sector (for example, some parts of the hospital care and physiotherapy). In recent years, many countries like Netherlands and Germany have started to increase price competition for hospital services. Until very recently, cost containment was the major issue in the institutional design in the health care sector, Schut.
This is consistent with the fact that the Dutch hospital sector is not yet in a long-run equilibrium. In both models, we find a significant impact of idiosyncratic effects on the market outcomes. In the bargaining model, we find a significant negative effect of insurer concentration, but no significant effect of hospital concentration.
In the SCP-model, we find that the market shares of hospitals (insurers) have a significantly positive (negative) impact on the hospital price–cost margin. Second, we model the interaction between hospitals and insurers in the context of a generalized bargaining model similar to Brooks et al. (J Health Econ 11(3): 217–233, 1992) to estimate the effects of buyer and seller concentration on price–cost margins. First, we use a traditional structure–conduct–performance model (SCP-model) along the lines of Melnick et al. Using a unique dataset of transactions and list prices between hospitals and insurers in the years 20, we estimate the influence of buyer and seller concentration on the negotiated prices. In 2005, competition was introduced in part of the hospital market in the Netherlands.
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